Brokerage maintains 'hold' on Voltamp Transformers, target implies 32% upside in a year

Shares of Voltamp Transformers Ltd are showing signs of a possible turnaround after falling nearly 47 per cent over the past year. IDBI Capital has given the stock a ‘HOLD’ rating and set a 12-month target of Rs 9,501, implying a potential gain of 32 per cent from the current level of Rs 7,021.

What makes Voltamp Transformers attractive for traders?

The company’s financials remain robust. Having an ROCE of 29.1 per cent and ROE of 21.7 per cent, Voltamp has been consistent in delivering strong returns on capital. The balance sheet looks conservative and steady cash flows help in maintaining investor confidence despite market volatility.

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Analysts at IDBI Capital expect revenues to rise about 17 per cent year-on-year over the next few quarters, driven by higher volumes and recovering demand. EBITDA could grow roughly 15 per cent, with margins holding near 19 per cent. Net profit growth may be slower at 4 per cent, affected by lower other income and higher depreciation costs linked to ongoing capacity expansion.

At present, Voltamp is expanding production capacity to meet rising demand for transformers, as government and private sector spending on power infrastructure has increased. While these investments raise costs in the short term, they are expected to pay off in future revenues and profits.

Voltamp stock performance

The stock trades near Rs 7,012, with a market cap of Rs 7,095 crore. Its 52-week range is Rs 5,900–14,280, and it offers a dividend yield of 1.4 per cent.

Analysts say the stock remains a strong option for medium- to long-term investors looking to benefit from growth in the power equipment sector.